The music industry has faced considerable strategic challenges in recent years, not least the trend towards reduced revenues caused by file sharing, but also the shift in market power from labels towards online aggregators such as Apple iTunes. Another side-effect of the world wide web on the music industry has been the trend towards dis-intermediation, with some enterprising musicians bypassing the labels to publish and sell music directly over the web.
Various aspects of user-centric business models have also been employed in the music sector. The use by Sellaband of crowdsourced band financing was previously covered here and elsewhere. Separately, the metal band Nine Inch Nails offers fans the facility to remix and upload their own versions of some tracks.
Now, two music industry companies at opposite ends of the size scale are using open innovation and crowdsourcing in new ways.
On 12 January last, EMI, the major music label, in association with BootB, “the online platform dedicated to challenge the marketing industry”, launched a worldwide competition to find innovative new ways to help consumers connect with music. The challenge, which is open to all creative sources (agencies, professionals, consultants, freelancers, innovative minds), is to find solutions for people who love good music but think it is currently hard to find.
BootB (Be out of the Box) is an online marketplace launched a year ago that allows anyone anywhere to respond to the creative briefs of major organizations and be paid professional fees for their ideas. BootB says that since it was launched, more than 10,000 people from 118 countries have joined the creative department of BootB to receive briefs and submit their ideas.
The press release announcing the project includes the following quote attributed to BootB’s Founder and CEO, Pier Ludovico Bancale: “As part of its new innovation strategy, EMI Music wants to leverage the power of BootB to solicit unconventional ideas from around the globe, and find a truly original, one-of-a kind innovation concept. This new extraordinary pitch confirms the relevance of our business model that is based on crowdsourcing of ideas. Original ideas will arrive from everywhere and the winner could come from anywhere.”
At the time of writing, the challenge is due to close in just under an hour. The page on the BootB site with details of the challenge shows that it has a budget of US$10,000 and 118 submissions. According to a comment from EMI, submissions could relate to an idea or a product solution, and not just a marketing idea.
At the other end of the scale, TechCrunch recently reported on Denmark-based startup Minimum Noise, which is planning to introduce crowdsourcing to music production, by “connecting musicians around the world in an open marketplace where like-minded artists can get together to create music tracks”.
According to the TechCrunch article:
..users can submit a project, describe what they’re looking for and what they’re prepared to pay for it. This can be anything from vocals to a bassline or the main instrumental riff, but the bottom line is that someone from the Minimum Noise community is supposed to run with the project and add a layer to whatever exists already. Typically, this would be something the project creator(s) or any of his musically gifted friends or family members are unable to accomplish without looking online for help. Project creators can accept submissions from other community members, pay him / her if they’re happy with the results and obtain the necessary material and rights of usage.
Comments to the TechCrunch article offered mixed views as to the prospects for Minimum Noise. Its prospects may be helped or hindered by how well it enables the process of co-operation between members.
These developments are reflective of a recognition, by both the large incumbents and small players in the music industry, that the closed models of the past are now history. The process of innovation can shift the ground under existing players in a very short space of time. How many of today’s major labels will still exist in ten year’s time? Will major labels exist at all by then? What business model will dominate in the future?
In the case of EMI, the BootB initiative signals, on some level, a willingness to change and innovate. In five years time, the majors may, by adapting to the changing nature of the sector, continue to dominate the world market for music. Alternatively, the market may shift completely to one where artists, serviced by innovative companies like Minimum Noise, sell directly to music consumers, with extensive use of a ‘freemium‘ business model, where some music is given away free to entice consumers to purchase premium music and related products.